Renewables outshine natural gas

We’ve known for some time that the levelized costs of solar energy and wind power are competitive with conventional fossil fuel power plants—even natural gas.  But a new and detailed report from the Rocky Mountain Institute clearly shows that clean energy technologies are the least cost option. [1]

It’s not a question of just installing a photovoltaic array or a windfarm in place of a natural gas power plant—it’s necessary to combine several technologies in order to manage both the intermittency of renewable energy and the energy demand profile—both peak loads and ramp events.

The report looks at four natural gas power plants: two combined cycle gas turbine (CCGT) plants (one in Florida and one in California), and two natural gas combustion plants (one in Texas and the other in South Carolina).

On the face of it, natural gas looks like a good option. Recent advances in technology and the current low price of natural gas mean that new natural gas-fired turbines are more efficient and less costly to run than aging power plants.  This has led to what RMI calls a ‘rush to gas’–with utilities and independent power plant developers announcing plans to invest $100 billion in the US in new natural gas-fired power plants through to 2025.  Extrapolating this trend through to 2030 suggests that around $500 billion will be required  to replace retiring power plants with new natural gas-fired capacity.

That’s not just a lot of money.  That’s a lot of emissions of carbon dioxide: around 5 Gigatonnes (Gt) through to 2030 and 16 GtCO2 to 2050.

RMI looked at how ‘clean energy’—meaning renewable energy, efficiency plus smart energy management including storage—might be able to provide the same services as these natural gas-fired power plants.  The trick is to make solar and wind dispatchable by employing utility-scale smart storage, while both reducing final demand through efficiency improvements and flattening the demand profile through behind the meter storage.

The results of the RMI analysis show that the clean energy proposals are substantially less costly compared to the combustion turbines planned for peak-hour operation.  Cost savings were between 47 and 60 percent.  For the combined cycle gas turbine plants designed for high capacity operation, in one case (California) there was a 8 percent cost reduction; in the other (Florida) there was a 6 percent increase.

It should be noted, though, that the RMI analysis did not factor in the cost of carbon emissions—or any of the other external costs associated with the upstream production, processing, and transport of the fracked gas. Not to mention the continuing opposition to natural gas pipelines.  Just this week there was a report of the growing resistance to the Mountain Valley Pipeline designed to carry fracked gas 500 km from West Virginia to Virginia.[2]  More information about the environmental impact and external costs of fracking can be found on this website [3].

There are other factors that policy-makers should take into account—the most important being the continuing strong decline in the capital cost of utility-scale photovoltaic energy and wind power, residential and commercial distributed PV systems, and energy storage systems (both utility-scale and residential). [4]  Moreover, the O&M costs of renewable energy technology are minor—whereas the natural gas-fired power plants will rack up millions of dollars each year in fuel costs.

Stranding room only

The RMI report concludes: “Across a wide range of case studies, regionally specific clean energy portfolios already outcompete proposed gas-fired generators, and/or threaten to significantly erode their revenue within the next ten years.  Thus, the $112 billion of gas-fired power plants currently proposed or under construction, along with $32 billion of proposed gas pipelines to serve these power plants, are already at risk of becoming stranded assets.”

The same analysis conducted in Canada would show even greater savings in provinces where a carbon tax on emissions is applied. That’s the case in Ontario where the decommissioning of the Pickering nuclear power plant near Toronto is under discussion. The aging plant has already operated for two decades more than its 30-year planned lifespan [5].  While Ontario is firmly committed to renewable energy, the RMI analysis should dispel any notion that natural gas may offer a more attractive alternative for the generation of megawatt scale electrical power.

ESSential stuff

A final point concerns energy storage systems. Much more aware than those dumb old lead-acid batteries, smart interconnected ESS management systems are the key to unlocking the full potential of utility-scale photovoltaic electricity and wind power. But a lot more research and development is needed before these systems attain their full commercial and technical potential.  This area of research should be an absolute priority for Canada’s engineering schools.

 

Under the hood:

[1] The economics of clean energy portfolios, available at: https://www.rmi.org/insights/reports/economics-clean-energy-portfolios/

[2] See: Tree-sitters launch 9th aerial blockade of Mountain Valley Pipeline.  At: https://www.ecowatch.com/mountain-valley-pipeline-protesters-2571084795.html

[3] See: https://climatezone.org/fossil-fuels/hydraulic-fracturing/

[4] See :  Renewable power generation costs in 2017. International Renewable Energy Agency (IRENA) 2017. Available at: http://irena.org/publications/2018/Jan/Renewable-power-generation-costs-in-2017.  Also, see: Renewables 2017 Global Status Report. Renewable Energy Policy Network for the 21st Century (REN21). Available at : http://www.ren21.net/gsr-2017/

[5] The Toronto Star May 23, 2018. Page A8.

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